Ivanhoff Capital

MarketSurge powers the charts in this video.

What a difference a week can make. The first week of September brought a brutal selloff across the board. In the second week, we saw a massive recovery. This reminds me of how January started. The big pullback in semis in the first week was followed by multiple weeks of a strong rally. The odds are low that we will see a repeat of that but we have to remain open-minded to the possibility.

The next FOMC meeting is this Wednesday. There will be a rate cut. The only question is 25 or 50bps. It seems the market expects a 50bps cut and might get disappointed if it doesn’t get it. There’s no reason to be short until we see stocks and the indexes closing below the previous day’s lows.

Last week, we saw a wave that lifted all boats. Not only interest-sensitive stocks like homebuilders and biotech rallied but also tech and many other sectors. It has been a high-correlation market. Correlations are typically high during corrections and the first stage of a recovery. SPY is within 1% of its all-time highs so it is not rational to talk about a correction here. 

The biotech ETF, XBI made another higher low and it continues to work on the right side of a big base. It is setting up for a potential breakout near 103. We are already seeing multiple individual biotech stocks break out and run. Individual stocks tend to lead the ETFs and the indexes.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

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Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

Tech is under pressure again. QQQ made a lower high a few weeks ago and renewed its descent. SMH weekly chart might be working on a giant head-and-shoulders bearish pattern. Semis leaders are getting obliterated and they can’t even stage a brief bounce. The ones that bounce are getting faded.

The market expects a rate cut in September. It’s a given. The only question is 25 or 50bps and the outlook for further cuts that the Fed will provide. In the recent past, the anticipation of a rate cut was a tailwind for small caps, regional banks, biotech, and homebuilders. Not this time around. Only real-estate-related stocks showed some strength on Friday but nothing to write home about. The rips are getting faded there as well.

In the meantime, bonds of different durations are rallying. Long-term treasuries (TLT) are setting up for a potential breakout near their 52-week highs. Before 2022, they were the go-to safety play when the market would pull back or there was a recession threat. This narrative went upside-down during the rate hike cycle in 2022 and 2023. Things are back to normal as the market is expecting numerous rate cuts ahead and the economy has slowed down.

Corrective markets require a different state of mind to trade them profitably. Choppy price action is typical for a downtrend – upside gaps in the indexes are sold; downside gaps in the indexes are bought. Earnings upside gaps in individual stocks fade on day one or don’t lead to follow-through for more than a day or two. Downside earnings gaps continue lower.  You don’t have to be overly active in such an environment but if you have to – approach it tactically and be nimble as any gains can reverse quickly.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.

MarketSurge powers the charts in this video.

The US Dollar and interest rates continue to decline as the market expects the Fed to begin a series of cuts in September. The best-performing groups for the last week also reflect those anticipations – homebuilders, regional banks, biotech, REITs, Bitcoin, and small caps in general. In the meantime, tech mega-caps are showing relative weakness. This doesn’t mean they are short candidates. It means there are better opportunities elsewhere.

I screened for stocks priced above $7 with an average daily volume of 500k shares that gained at least 10% last week. 84 stocks met the criteria. Number one was Redfin (RDFN) which provides real estate information. The list is quite diverse – highly-shorted solar stocks like NOVA; mortgage companies like RKT; biotech like TNGX, VKTX, and TERN; homebuilders like TOL BLDR, recent IPOs like TEM, earnings breakouts like CAVA and ZM, regional banks – DPST, etc. There is a lot to choose from.

I recently published a few children’s books. Check them out if you have kids or friends who have kids: Investing for babies, Trading for babies, Meditation for babies. You can find my other trading books on Amazon here.

Try my subscription service which includes a private X feed with option and stock ideas, emails with concise market commentary, real-time market education, the Momentum 40 list of market leaders, and much more. See what subscribers say about my educational service.

Check out my free weekly email to get an idea of the content I share with members. How my ideas/alerts did.

Disclaimer: Everything I share is for educational and informational purposes only and it should not be considered financial advice. Read my full disclaimer here.